Originally Posted by maddog34

adding a spacer behind the cassette will cause the lockring to not engage the freehub threads.

the HG freehubs are set to the correct distance from the dropouts when made... only an extremely low budget hub or an axle set that's been changed will cause the cassette to be out of alignment with the frame more than a millimeter or so.
a 7 speed cassette on a 8-9-10-MTB11 freehub will already have a spacer in place, or the lockring won't press on the cassette much if at all.... the looseness is obvious.

i'd first suspect that the wheel in question has had the axle parts shuffled or replaced at some point in it's life.

Update: i just now measured three 8-9-10 rear freehubs... 6mm from outside axle locknut to the freehub body lip.. two shimanos and one formula... and 3mm from outside cassette lockring to outside locknut, with the same 8sp. cassette on them, hand tightened by me to my max hand torque.... Consistent and Standard... across three decades of HG hubs... an old LX paralax. a Deore XT, and a walmart level Formula disc hub.